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A Radical Way to View Your Gold and Silver HoldingsBy
Friday, March 25, 2011
I just got a letter from one of my subscribers, who asked a question many readers have asked before...
More or less, here's what he wanted to know:
When I buy a silver ETF, should I buy it in Swiss francs, euros, or U.S. dollars? (Either way, I have to go through foreign exchange.) Will there be any difference in these currency choices after a few years?
To answer, I have to repeat what I have said many times before. When you are buying these sorts of ETFs of precious metals, you are essentially selling – exchanging – paper money and, in return, buying a specific weight of metal.
You may be buying a certain amount of ounces. You may be buying a certain amount of grams or kilograms. It does not matter at all which currency you choose to sell in order to buy the weights of metals. Please, please, stop losing sleep over this.
Ideally, you should just sell your own currency to buy the weights of metals. This saves any currency conversion fee. But the idea that buying, say, three ounces of gold with Canadian dollars is better than buying that same amount with American dollars or buying that weight with Swiss francs is better than using any other currency... this simply misses the point of what you are doing.
Your aim is to accumulate weights of precious metals.
If you want to get a huge head-start over most everyone else on this planet, you will start thinking in terms of ounces, or kilograms, or grains, or taels – or whatever weight comes naturally to you – and not in terms of dollars, francs, euros, or dong.
I understand this isn't always easy to do. It may be easiest to own a round number of weights so you can easily track how much they are worth in terms of your own currency. For instance, say you own 100,000 ounces of silver. If silver happens to be trading at $36 per ounce, it is easy to reckon the value of that silver in dollars. In this case, you own $3.6 million of silver.
But that currency amount can always change. What doesn't change – unless you accumulate more – is the fact that you own 100,000 ounces of silver.
I don't know how else to put this. People ask me which currency to hold their gold or silver "in." Which currency has a better chance to hold its value over the years? This is not the right question. You are not buying currency. At least, you are not buying paper currency. You are instead selling it and buying specific weights of gold or silver.
It would be a happier and wealthier world if people stopped thinking in terms of national currencies and thought in terms of weights of metals. If this happened, governments would not be able to manipulate the values of their national currencies and cause all sorts of misery.
But you can't control this: If it happens at all, it will happen in the future – and sadly, probably far into the future. However, this doesn't mean you can't stop thinking in terms of national currencies whenever possible.
I understand that when you go to buy gasoline, milk, or bread, you will be charged some denomination of some national currency. But the amount of that national currency needed to buy the same amount of bread or gasoline or milk has been increasing over the decades. That means these national currencies have been debased.
Some of them have been debased faster and worse than others. But had you kept your money in silver for the last 60 years, you'd be spending less of it for each gallon of petrol or litre of milk or loaf of bread than you are today with your increasingly worthless pieces of national paper currencies.
Good investing,
Further Reading:
Silver is gaining in value compared with gold, according to a dropping gold-to-silver ratio. This hasn't been the case for decades... But it's great news for silver. See the charts that prove it here: The Most Important Silver News in Nearly 30 Years.
Gold is still the perfect hedge against competitive currency devaluation. But there are many misunderstandings about the precious metal... If you own gold, or plan to, you better know what you're buying. Don't miss this Daily Crux interview with Brian Hunt that debunks the biggest myths on the gold market today.
Market NotesANOTHER NEW HIGH FOR GOLD This week brings another new high in the world's strongest uptrend... the ongoing rise in "real money."
As our friend Chris Weber pointed out in January, gold's 10 consecutive years of higher prices is an anomaly. No uptrend in any widely traded asset in the past 200 years can match this rise for sheer "year in, year out" consistency... which was boosted by a huge $200-per-ounce move late last year.
After such a huge move, it was only reasonable to expect gold to go through an extended, healthy correction. That's just how the markets work. Gold did decline in price a little... and then staged an amazing rally... which has taken it to a new multi-decade high. This is some of the most impressive price action we've ever seen, and it's indicative of a huge trend the mainstream media isn't telling you about... or doesn't even understand.
The trend is the loss of faith in the U.S. dollar. As we've recently shown you, the U.S. government's "tax, borrow, and spend our way to prosperity" mindset has brought our colleague Porter Stansberry to say that we're not "headed" for a currency crisis, we're in one right now. The dollar – aka "paper money" – is losing ground against gold – aka "real money." And as gold's amazing rally shows us, the rate at which the dollar is losing ground is accelerating.
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